All Forum Posts by: Brooks F.

Thanks for the thoughts.

It makes a lot of sense. I'm going to go ahead and invest in an inspector to verify a couple of the properties. It sounds like it may be worth doing at least that due diligence.

I just don't want to get so blindsided by what looks like a great deal that I get myself into trouble, as I know a lot of people do.... they walk into walls because they think its the deal of the century.  I'd rather take a medium risk 10% than a high risk 25%!

 The idea of getting market rents on a complex that large is too tempting- clouds my judgement. Effective cap rate at 28%? (50% maintenance).  Burnt is what it sounds like, I just have a hard time understanding how someone can get so burnt out they let properties go vacant.

Sounds too good to be true, so I might just buy a couple of the smaller complexes with existing clients since they have little risk (Positive cash flow from day 1)...

Or I could go big... 

I don't think I want to buy all the complexes even though I could pull together the money, so I have enough cash to cover risk/negative cashflow periods temporarily. 

I've seen some vacant apartment complexes, and it always confused me. I've now been presented an opportunity to buy a medium-large (44 unit) apartment complex... that is vacant. The numbers add up pretty easily- the area is rentable, fair rents, building seems decent. 

Now my problem is I don't understand WHY a complex would be vacant, void of major repairs. In this case however, while it could use some updates, the seller claims its fine . The weird thing though is the guy is really old (close to 80), and he has 11 complexes he's selling. 4 are vacant, and the other 7 are 20-60% capacity. There are no listings at the places that are even partially at capacity.

I did a little due diligence- there's nothing weird filed with the govt, no back taxes, no notices of it being uninhabitable.... just vacant.

I also don't understand why you wouldn't put a property like this formally on the market. I get unlisted apartment complexes with people in it, because you don't want them to know its for sale, but vacant?

I'm about to walk away just because the whole thing sounds "fishy", but I have read about people buying "vacant" apartment complexes when I search here. I love the idea of buying a complex like this, but it just doesn't add up. Can anyone on here weigh in? is it worth having someone inspect it? Help me understand!

Thanks much!

I always like the "Best of both worlds".

I have a full size truck + a high fuel economy sedan. The truck is junky enough that I don't mind USING it. So many people have expensive trucks and they are paranoid about mulch or wood or anything else in the bed. You want a crappy enough truck you can actually use it.

Then I have a nice sedan for DD duty that is comfortable, safe, and good fuel economy.

Works out wonderfully, and its cheaper to have both than 1 nice truck.

This is the topic that first got me interested in Real Estate. I was planning on buying raw land, and it seemed like you could make a killing by layering over several different uses, including leasing hunting rights and pumping oil and natural gas, or timbering the land.

When I crunched the numbers, they always seemed to work out. My questions are:

1. I know lots of people do this stuff, am I missing where raw land development and cashflow generation methods are discussed on biggerpockets? I don't see any place where this stuff is referenced.
2. Devoid of number 1, does anyone else do this strategy? Any good resources on getting started here?

Thanks for the thoughts.

I don't know if I want to be a landlord yet. I own some NNN Commercial properties but I don't trust commercial long term in our market, and thought residential is safer, but I'm looking at medium sized properties under 1.5M. Seems like the apartment complexes in the 500-1.5m range just move in seconds and sell for ridiculous premiums that seem to break all the 1%/2%/etc. rules of investing.

But I think your probably right, that its better to look around and be smart than just try to wait out the market, so thanks for the thoughts. My RE is trying to convince me to buy some unrented apartments that need to be completely overhauled, but that seems like a lot to chew for a first residential property, but that might be worth tackling. Found one for $200k that he thinks only needs about 100k to get value it around $500k and bring in 8400/mo in rents. thats a 10.08 cap rate, but a 17% on the investment amount. I'll save that debate for another forum though.

I should have thought that way but paralysis by analysis seems pretty common in this industry!

 Thanks for the thoughts. My response to you is about the same as it was to @Jay Hinrichs!  Your right about playing the current market instead of waiting for the market to align to you. Thats the same thing I'd tell someone else in business or stocks, so why would this be any different!

Thanks for the thoughts!

I wonder if this depends on your personality.

I talk it up with EVERYONE because I feel like I have a personal responsibility to help them.

Help them you might ask? Yes. I talk about investing, and real estate, and similar to everyone I can, because I want to help them become successful too. I've inspired so many people to get out there and invest in different places that it makes me overjoyed to know I'm actually changing lives.

The reason I mention that it depends on your personality is everyone at work knows that I do all this stuff, and i'm kind of the teacher type (and by teacher type I mean I moonlight as a college professor). I've found it amazing how many people WANT to learn from you, and I learn a lot from them discussing it!

There's a few people that get turned off by it, but I figure those people aren't worth being friends with anyway. Normally they are the uppity stuck up fools that blow their credit cards on Michael Kors and get BMW 5 series leases they can't afford, and then whine about how they can't afford a trip to the Bahamas. Those people aren't worth your time.

People who are worth befriending are the ones who will take an interest in what you do, learn from you, and teach you a few things too!

I schedule my days really disjointed. I'm not real productive when I don't get much sleep, so I play off that to my advantage.

Mondays I work 7 am to 2 am tuesday.  Then I sleep until 6, getting me 4 hours of sleep.
Tuesday I then do things that don't require thinking, like a lot of busy work. I then go to bed at 11 PM, and sleep until 6 ( 7 hours of sleep)
Wednesday I'm well rested, so I work 7 am to 2 am again. Then I sleep until 6, again netting me 4 hours of sleep.
Thursdays again I do things that don't require thinking, and go to bed about 11 pm, sleeping until 6. Thats 7 hours of sleep.
Then Fridays, again I work about 7 am to 2 am. 

I crash and burn on the weekends, putting in about 8 hours/day of work but then most the time is "family time" because family is a priority. Family doesn't care if I'm not sharp though. so ti works out well. Go to bed about 11, sleep until about 8/9 to make up for it.

When its all said and done, my schedule looks like:
4 h, 7h, 4h, 7h, 4h, 9h, 9h

Thats an average of 6.3 hours a night, but I find 6.3 hours a night isn't enough for me. Thats because I'm an 8h kind of guy, and really need more like 8 hours a night. This method frees up 12 hours a week of extra work potential though, which generates massive cash annually.... thats 624 extra hours of work!

its not just work though, I end up getting 57 hours of high quality work, and 16 hours or so of lower quality work, then Tuesday Night is date night with my wife and Thursday night is family night with the kids. That means I get 73 hours of work M-F while still having family time and wife time, plus about 16 hours of work on the weelend, which brings me to about 89 hours or so, all while keeping my family happy!

I did a lot of research, and while a lot of research said that you should have the same amount of sleep every night, there's also a lot of research that talks about sleep cycles. If 4 hours recharges me about the same as 6 hours, then why not let this sleep schedule work. 

I read the beginners guide to real estate, and based on my interpretation of the section about the RE cycles, it seems pretty clear that this is a "Bad time to buy"

However, I also read the section that "Not acting" is pretty much the worst thing to do.

This is creating paralysis from analysis! (also what the guide talks about!)

So whats your take... is this an awful time to get started since the property values are so high and the appraisers aren't appraising as high as the purchase prices? or is this a fine time as long as your smart and don't do anything stupid?

Is it worth waiting for the market to decline, or should you move simply because procrastination is more painful than a bad move?

I know some people don't feel comfortable with the topic, but my wife feels comfortable as long as she is armed. She has her ccw and stays trained for reasons like you state. Our friends who is an RE agent was attacked years ago, and she said her RE agency started offering training classes for agents.

Its an option if you feel comfortable with it and live in a place where its legal, which you do.